One of the Mid-Columbia’s largest employers has shuttered a potato processing plant and laid off the facility’s roughly 375 workers as part of a restructuring plan.
Lamb Weston announced the closure of the Connell plant on Oct. 1, saying it also intends to temporarily curtail some production lines and schedules throughout its manufacturing network and eliminate some other jobs amid rising costs and declining revenue.
The news sent ripples of concern and worry through the city of Connell, which has a population of about 3,000 people, not counting those at Coyote Ridge Corrections Center.
The potato processing plant, which made a variety of french fries and other frozen potato products, was one of the top two largest employers in the city, Mayor Lee Barrow said.
He estimated that about 150 of the plant’s workers live in or around Connell, while the others come from elsewhere, including the Tri-Cities.
Connell is in Franklin County, about 40 miles north of Kennewick.
“We were shocked that this happened,” Barrow said, noting that officials still are crunching numbers but expect the closure to have a significant impact on city coffers.
Ripple effects
The city operates its own water utility, and about $580,000 – or a little more than half of the utility’s annual revenue – came from the plant, Barrow said.
The plant also generated another $200,000 or so in other revenue for the general fund from taxes, electricity, solid waste and so on, Barrow said.
The city’s total annual budget is about $20 million.
“It’s going to be rough going for us for a while,” Barrow said, adding that the city is “going to have to tweak the budget … and we’re going to have to make some tough decisions on where we’re going to cut.”
Meanwhile, Barrow said the city is working to help the laid off plant employees themselves. City officials have reached out to agencies such as the Benton-Franklin Workforce Development Council, Tri-City Development Council, or TRIDEC, and the office of U.S. Sen. Maria Cantwell, D-Washington, to collect information on services for the workers.
“That may include help with utility bills, rent, who knows. We’re just trying to find as many services that are available to them as possible,” Barrow said.
Karl Dye, president and CEO of TRIDEC, confirmed that his agency is working to help both the displaced workers and the affected municipalities, primarily the city of Connell. That means looking to connect workers with other employers and coordinating with state agencies, such as the state Department of Commerce.
“We want to minimize the impact, especially on Connell, but also on our region – both in employment and infrastructure,” Dye said. “We’re trying to do everything we can.”
The Connell plant stopped production on Sept. 30 and shutdown work has started, Lamb Weston said in a statement. The company is encouraging the laid off workers to apply for other jobs in Lamb Weston, offering outplacement assistance, and holding an internal job fair and job fairs with other companies, the company said.
The city also plans a job fair.
Laid off workers still are being paid for 60 days in compliance with federal law.
Economic conditions
Lamb Weston described the decision to shut down the Connell processing plant as difficult but said that economic conditions required it.
“A supply and demand imbalance in North America and an ongoing inflationary environment necessitate these difficult steps,” said Tom Werner, Lamb Weston CEO, in a statement. “We take very seriously any job elimination and understand the impact these decisions have on employees and the communities in which they live. We have taken care to provide transparency and support in transition, and we thank all of our talented team members and the community of Connell for its partnership over the years.”
In a statement on its finances from the first quarter of the new fiscal year, the company reported declines in sales, income and diluted earnings per share.
Net sales, for example, declined 1% to $1.65 million compared to the same period last year, while income from operations declined 34% to $212 million and net income declined 46% to $127 million, according to the financial report.
The statement also touched on the restructuring plan that involves closing the Connell plant, along with “temporarily curtailing production lines and schedules in North America, reducing approximately 4% of global workforce, and eliminating unfilled job positions.”
The company’s total workforce numbers about 10,700 workers.
Lamb Weston has a significant presence in the Tri-Cities area beyond the Connell plant, employing more than 2,500 people in Benton and Franklin counties.
It’s unclear if any other local workers are affected, apart from those in Connell. A company spokeswoman said she didn’t have specifics on the location of other positions impacted.
The restructuring is estimated to generate $55 million in pre-tax cost savings and a $100 million reduction in capital expenditures during this fiscal year, Lamb Weston said.
The restructuring actions “are proactive steps designed to improve our operating efficiency, profitability and cash flows, while also positioning us to continue to make strategic investments to support our customers and create value for our stakeholders over the long-term,” Werner said in a statement.
Filling the void
Potatoes are big business in Washington. The state’s 2023 potato crop was valued at $1.09 billion, and frozen french fries were the top export at $1.1 billion.
In Connell, Lamb Weston still has two to three potato sheds to store potatoes, Barrow said. They were built fairly recently, and the city hopes they’ll still be used, he added.
As for the processing plant, it’s headed for demolition.
The Lamb Weston spokeswoman said, “we will go through the process of decommissioning the plant and we will demolish the building while retaining the land.”
Barrow hopes the city will be able to attract another company to the area.
“We’re hoping somebody will come in and (fill) that void,” the mayor said.
“We’re willing to work with anybody that wants to come in, and we invite any of these larger companies that can employ a large amount of people to come in and check us out. We’re close to the highway, rail, Tri-Cities, Spokane. We’re in a good location,” Barrow said. “We’re hoping somebody will see that and come in and build and take the place where Lamb Weston left off.”